Virtual Assistant Payment System

What is a payment system?

According to Wikipedia, any method used to resolve financial transactions through transfer of money is called payment system. There are two main types of payment system, traditional payment and online payment. It involves technologies, people, standards, rules and procedures. With the birth of computers and electronic communications, electronic payment evolved. Electronic payment refers to payment made from a bank account to another using electronic methods with direct involvement of bank employees. It is also referred to as e-commerce or online payment.

Online Payment

What is online payment?

Money that is exchanged electronically is called online payment. It is a transaction resulting in transfer of money from a client’s credit card or bank account to your bank account.

How does online payment work?

This is a process that involves the internet, computer devices (laptop, desktop, iPad, or mobile devices), and digital stored value systems (Merchants or Online Payment Gateways).

Merchants (Online Payment Gateways)

What are the types of online payment gateways?

Since online purchasing of products, goods or services started through e-commerce, a lot of merchants have emerged. Amongst the popular ones are Amazon Payments, WePay, PayPal, Authorize.net, 2Checkout, Dwolla, Stripe, Worldpay, Merchant E-Solutions, Simplify Commerce.

So why should I use a payment gateway?

Mainly because of its security, time and flexibility. They ensure safe transactions between you and your clients by easing up security encryption of your client’s information and credit card numbers and help meet data security standards online. Gateways save you time and work. They offer flexible types of payments your clients can use. This is good for your virtual assistant business as it increases likelihood of sales by widening your client’s accessibility with varieties of payment types.

Things to Consider in Choosing a Payment Gateway

When third-party tools are involved, you need to evaluate each feature and make choice base on you and your client’s needs. Consider the following factors:

Payment Location – Payment gateways either leads the user onto another website or allow customers to complete the transaction within the checkout processes of the website. Both locations work fine but consider the best user experience for your clients. They might not mind extra redirection, if they trust your website.

Security – Online clients are very keen to merchants when it comes to their financial information and will not easily jump into shady merchants online. Merchants that are likely to be used are reputable, will provide safe payment process, and will handle delicate client’s data with care.

Accepted Payment Methods – Reality is, clients preferred payment method is the easiest way to make their payment. So, offering multiple payment methods to your clients is a good option because it is safe and comfortable for them to make payments.

Cost – Almost any service, there are fees involved using merchant payment gateways. Transaction process on behalf of your online services, you will have to pay fees. Before using a merchant or recommending it to your clients, do your research and review the merchant’s gateway’s costs. Common fees associated are transaction fees, merchant account fees, statement, chargeback, certain payment method fees, and especially hidden charges (clients do not like hidden charges).

Compatibility – For virtual assistant or freelancer having a website, adding a payment gateway on your website’s platform. An important factor is how well it is integrated into your platform on a technical or design standpoint. Make sure your merchant tool is compatible to your website and brand.

Traditional Payment

What is traditional payment?

It is a system of payment that involves negotiable instructions such as drafts (cheques), documentary credits (letters of credit, credit cards) and cash.

Cash – This is the most common type of payment. It is a legal tender such as currency of coins or bank notes labeled by national authority to render value.

Cheques – This a form of paper draft signed by the client using a cheque booklet. This is traditionally used for large or small transactions.

Documentary Credits such as letter of credit or credit card serves as an account that extends credit to clients. It allows clients to purchase services while postponing payments. Visa and MasterCard are the most common type of credit cards that set standards for the banks.

How does traditional payment work?

Cash payment works by interaction with client and freelancer or virtual assistant. The client handover or give the money. Cheques also involves intervention between the two, but it requires a cheque booklet instead of cash. Credit cards does not require meetup between the two. It requires an online tool such as merchants or a portable device in order to process the payment to be credited to the freelancer or virtual assistant bank account.

Security – Because they’re using it for a long time, it is convenient to them. They feel a sense of safety and security when using traditional method. It is easier for them to give payment as cash, send a cheque, or charge their credit card.

Tradition – It has been widely used before e-commerce existed and every people know how to use it.

Pros and Cons – Online versus Traditional Payment

Pros

Online Payment is very convenient in comparison to traditional payment method. The client can pay for services online at any time, day or night. It can be done in any part of the world. The client does not need to wait in queue for their turn to transact. There is no clearing period of funds unlike cheques. This simply get rid of security risks unlike handling cash. The likelihood of sales will increase. It is becoming the preferred payment option nowadays. Postage fees of cheques and additional cash charges are eliminated.

Traditional Payment like cash gives instant purchasing power, requires no authentication, and it is portable. It does not require intervention. It allows micro payments, small amounts. It does not have financial risk for clients. The sale cannot be discredited. It does not require especially hardware to complete a sale. Use of credit cards allows clients to make small and large purchases. It is widely accepted as form payment. It reduces risk of theft unlike cash. It is convenient. Clients do not need to pay services instantly until receiving credit card bill 30 days after issued by bank with transaction fee.

Cons

Online Payment have high security risks. It is vulnerable to hack. Phishing attacks tricking clients regarding client’s log-in detail are most likely. Disputed transactions are less likely to win in claims of a refund. Merchant charges additional fees in terms securing your sensitive information.

Traditional Payment like cheques have clearing time. It usually takes 3 days after deposit. It introduces security risks for clients because signature can be easily forged. If there are not enough funds in the client’s checking account, they may bounce. Financial risk is more likely to happen when clients carry cash as payment because it can be easily stolen or lost. Cash purchases are permanent, final. It is irreversible. No security against unauthorized use. It does not provide time period between purchase of services and actual payment. Use of credit cards involves transaction fees. When a credit card is stolen, client can disprove purchases which increases risk for clients and issuer bank.

SO, WHAT'S NEXT?

Hi, I'm Paul. If you enjoyed reading this post you might like to check out: